Shortfall, Rebound, Backfire : Can we rely on energy efficiency to offset climate policy costs?

May 31, 2012 | 00:00

Shortfall, Rebound, Backfire : Can we rely on energy efficiency to offset climate policy costs?

A new assessment of the Department of Energy & Climate Change’s (DECC) proposed energy efficiency measures and their supposed benefits to UK consumers reveals that the public has been seriously misled by the Government about the likely impact of climate policies on energy bills.

Renewable Energy Forum, in an analysis of the DECC’s own figures, has found that the Government expects only 35% of UK households will have lower energy bills as a result of the net impact of the Government’s energy and climate change policies, leaving 65% of households – 17 million –worse off.

Published today (21 May 2012), a report from Renewable Energy Forum (REF) - Shortfall, Rebound, Backfire : Can we rely on energy efficiency to offset climate policy costs? - shows that the UK’s energy and climate policies will be responsible for major increases in the retail price of gas and electricity in 2020, with percentage increases for electricity ranging from +27% for domestic households to +34% for medium-sized businesses and, for gas, +7% and +11% respectively.

REF conducted an analysis of the Department of Energy & Climate Change’s 2011 Annual Energy Statement. In the section entitled ‘Estimated Impacts of Energy and Climate Change Policies on Energy Prices and Bills’, the Government claimed that energy-efficiency measures will protect domestic households by reducing consumption and thus preventing policy-driven price increases from being translated into increased bills.

In addressing Parliament on 23 November 2011, Chris Huhne, then Secretary of State at DECC, said, ‘By 2020, we expect household bills to be 7% lower than they would otherwise be without our polices. Moreover, bills will be lower during this Parliament. Britain’s homes will be cheaper to heat and to light than if we did nothing, in this Parliament and in the longer term.’ (Hansard, 23 November 2011, columns 300-301.)

Detailed forensic work conducted by Renewable Energy Forum shows that Mr Huhne’s claim was misleading. By decoding one of DECC’s own charts, the REF study shows that the Government expects that only 35% of UK households will have lower bills as a result of the net impact of the Government’s energy and climate change policies, leaving 17 million households worse off. DECC’s own data show that 65% of UK households will be net losers even if all the energy-efficiency policies work exactly as described in the Government’s plans, and costs of the climate change policies are correctly estimated.

Dr John Constable, one of the principal authors of REF’s study, said, ‘Mr Huhne should have said that even with very optimistic assumptions about high performance of energy-efficiency policies, his department calculates that bills would still rise for 65% of households. Instead, he chose to say that the “average” household would be better off. That was misleading, and Mr Davey, his successor at DECC, should correct the record.’

Dr Constable said, ‘There are several manifest failures of statistical propriety and methodological clarity in DECC’s work. The misleading use of an “average” household is a classic example of the deceptive statistics. We also found that in one key infographic the chart bars were not drawn to scale, concealing the Government’s dependence on the Products Policy to offset policy costs. The fundamental data for other critical charts are not disclosed and appear not to be in the public domain, making the chart unintelligible. Some policy cost data tables even have over-rounded figures, reducing some cost entries to zero, making it very hard to check the reasoning behind the totals at the bottom of the table.’

REF believes that DECC’s assumption of lower bills is overly dependent on extremely optimistic assumptions about the impact of the European Union’s ‘Products Policies’, to which the UK is committed, and which are meant to ensure improved efficiency of domestic appliances, as well as the impact of Smart Meters and the wholesale prices of renewable energy.

Dr Constable remarked, ‘Major elements in the EU Products Policies on which DECC are relying to offset energy and climate policy costs are not even agreed by the member states, while the others are taking longer than expected to implement, so Government claims about their effectiveness have little or no foundation in real-world data.’

For further information from REF, please contact 020 7930 3636 or exec@ref.org.ukThis e-mail address is being protected from spambots. You need JavaScript enabled to view it . For further information about Calor Gas Ltd’s commissioning of this study, please contact Olivia Pay on 020 7932 1599 or at oliviap@blj.co.ukThis e-mail address is being protected from spambots. You need JavaScript enabled to view it

Notes for Editors
Renewable Energy Forum Ltd is a wholly owned subsidiary of the charity Renewable Energy Foundation. Renewable Energy Forum undertakes consultancy work to generate income to support the work of the charity. Renewable Energy Foundation (registered charity 1107360) promotes sustainable development for the benefit of the public by means of energy conservation and the use of renewable energy.

Shortfall, Rebound, Backfire , by Dr John Constable, Dr Lee Moroney and Diana Beatty, was commissioned by Calor Gas Ltd. Calor wished REF to review the Government’s impact analyses in DECC’s 2011 Annual Energy Statement. This was because, within two years (2009-2011), the Government had moved from a position where the policies were going to result in increased energy bills for both householders and businesses to one where the public were advised that the policies were, instead, going to save money. Calor commissioned REF not to scrutinise the effectiveness of the policies but, in the interests of transparency, to establish their true costs.

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